United States: Cybersecurity: President Obama’s Executive Order Is Only the Beginning

This On the Subject outlines why hospitals and
financial services and communications companies should pay
attention to the recent executive order entitled "Improving
Critical Infrastructure Cybersecurity."

On February 12, 2013, shortly before he delivered his annual
State of the Union address, President Obama signed an executive
order entitled "Improving Critical Infrastructure
Cybersecurity." Anyone who believes this executive order
answers the most important questions regarding its implementation
vis-ŕ-vis private-sector entities is mistaken. In many
ways, the executive order raises more questions than it
answers: How precisely will the administration designate
"critical infrastructure"? Will the administration
cast a wide or narrow net? Will participation in the Critical
Infrastructure Cybersecurity Program truly be
"voluntary"? Or, as some suggest, will
private-sector entities that choose not to participate in such a
program be susceptible to a "name and shame" process by
the federal government?

The one thing that is certainly clear from the executive order
is that it is not the last word in the area of cybersecurity.
In fact, the executive order explicitly invites Congress to pass
cybersecurity legislation that could affect a wide range of
industries. And, not to be outdone, Congress is already
considering cybersecurity legislation, which is described more
fully below.

"I Run a Hospital/Financial Services Company/IT
Company. Are We Critical Infrastructure?"

Under the administration's executive order, the answer to
this question is "yes, maybe." Section 9
(Identification of Critical Infrastructure at Greatest Risk)
directs the secretary of the U.S. Department of Homeland Security
(DHS) within 150 days of the executive order "to use a
risk-based approach to identify critical infrastructure where a
cybersecurity incident could reasonably result in catastrophic
regional or national effects on public health or safety, economic
security, or national security."

The executive order does not define "catastrophic regional
or national effects." However, Section 2 defines
"critical infrastructure" as "systems and assets,
whether physical or virtual, so vital to the United States that the
incapacity or destruction of such systems and assets would have a
debilitating impact on security, national economic security,
national public health or safety, or any combination of those
matters."

Among other things, the secretary of DHS is directed to apply
consistent, objective criteria in identifying critical
infrastructure, and to notify owners and operators of critical
infrastructure confidentially.

At present, it is unclear whether the federal government will
cast a wide net in designating "critical infrastructure"
under this executive order. It is not inconceivable, however,
that an owner or operator of a medical facility or financial
services or communications company whose importance to public
health and safety or economic or national security is critical to
its region could be designated "critical infrastructure"
under this executive order.

"What Does It Mean If My Private-Sector Company Is
Designated Critical Infrastructure?"

The executive order directs the director of the National
Institute of Standards and Technology (NIST) to develop a framework
to reduce cyber risks to critical infrastructure, and to publish a
preliminary version of this framework within 240 days and a final
version within one year of the date of the executive order.
This framework "shall incorporate voluntary consensus
standards and industry best practices to the fullest extent
possible." NIST is accepting public comment on this
framework until April 8, 2013.

Thereafter, the secretary of DHS is directed to establish a
"voluntary program" to support the adoption of the final
cybersecurity framework by owners and operators of critical
infrastructure and other interested entities. Some in the
business community believe that this program will in fact not be
voluntary, but rather is an effort by the federal government to
impose onerous regulation on private-sector entities. In
particular, some point to Section 8(c), which requires
sector-specific agencies to "report annually to the President
on the extent to which owners and operators notified under section
9 of this order are participating in the Program."
Furthermore, Section 8(d) directs the secretary to "coordinate
establishment of a set of incentives designed to promote
participation in the Program." The secretaries of DHS,
the U.S Department of the Treasury and the U.S. Department of
Commerce also are directed to make recommendations to the president
regarding the benefits and effectiveness of such incentives, and
whether the incentives would require legislation or could be
provided under existing law.

Other Key Provisions of the Executive Order

Two other provisions of the executive order deserve
mention. First, the order calls for the "timely
production of unclassified reports of cyber threats . . . that
identify a specific targeted entity." The order also
calls for a process to disseminate "classified reports to
critical infrastructure entities authorized to receive
them." This provision is intended to address a key
concern of industry—that it does not always have access to
important threat intelligence.

Second, the executive order directs agencies to "ensure
that privacy and civil liberties protections are incorporated"
in their cybersecurity activities. The chief privacy officer
and officer of civil rights and civil liberties of DHS are directed
to assess the privacy and civil liberties risks of the functions
and programs undertaken by DHS, and to recommend ways to minimize
and mitigate such risks. The executive order does not include
liability protections for private-sector entities that share
information with the government. Such protections would
require an act of Congress.

Congress Welcomes the Open Invitation to Legislate on
Cybersecurity

It would be a mistake to believe the administration's
executive order on cybersecurity to be the last word on this
topic. Rather, it appears to be the opening salvo in a more
protracted debate. Several bills on cybersecurity have been
introduced during the first three months of the 113th Congress, the
most important of which are the following:

Cyber Intelligence Sharing and Protection Act (H.R. 624):
This legislation, which was introduced by the chair and ranking
Democrat on the House Select Committee on Intelligence (Reps. Mike
Rogers (R-MI) and Dutch Ruppersberger (D-MD), respectively), is
expected to be on the House floor in mid-April 2013. A
similar version passed the House in 2012 by a vote of
248–168. This bill is specifically intended to
facilitate information-sharing by and between the federal
government and private-sector entities. Among other things,
the bill would permit the federal government to share cyber threat
information (including classified intelligence) with private-sector
entities if they are "certified entities" or have the
appropriate security clearance to receive such information.
The bill also provides liability protection for those who, in good
faith, use cybersecurity systems to identify or obtain cyber threat
information or share such information.

Cybersecurity Enhancement Act of 2013 (H.R. 756): This
bipartisan bill was introduced by Rep. Mike McCaul (R-TX), the
chair of the Homeland Security Committee. In general, the
thrust of this bill is to enhance national cybersecurity research
and development.

Cybersecurity and American Cyber Competitiveness Act (S.
21): This legislation, which was introduced by Sen. Jay
Rockefeller (D-WV), the chairman of the Senate Commerce Committee,
appears mostly to be a placeholder for future legislation.
The bill itself contains findings and "sense of the
Congress" provisions but no substantive proposals. Sen.
Tom Carper (D-DE), the chairman of the Senate Homeland Security
Committee, is one of seven co-sponsors. Sens. Rockefeller and
Carper were deeply involved in cybersecurity legislation in the
last Congress and held a joint Committee hearing on March 7,
2013.

Conclusion

The administration's executive order on cybersecurity was
triggered by Congress' failure to act in this area in
2011–12. This failure to act on cybersecurity is
largely attributable to disagreement over whether the federal
government should attempt to regulate private-sector entities and
whether it should provide them with liability protections if they
share cyber threat information with the federal government.

Furthermore, there has been no explicit acknowledgement by
members of Congress that the designation "critical
infrastructure" may (and perhaps should) carry concomitant
benefits and burdens. This is mostly because members of
Congress (particularly Democrats) do not want to acknowledge that
cybersecurity legislation may lead to additional regulatory
requirements. Thus, for now, they favor "voluntary"
programs and standards. One political path forward, however,
may require critical infrastructure to accept some regulatory
burden while also receiving some benefit (e.g., the
certainty that critical infrastructure will receive the electricity
or fuel it needs to operate in an emergency).

Private-sector entities—particularly those in the health
care, financial/banking or communications industries—should
pay very close attention to this evolving debate, because they
could be designated "critical infrastructure."
Private-sector entities also should pay very close attention to any
attempt by the federal government, under either the executive order
or subsequent legislation, to impose regulatory burdens upon
them.

Finally, private-sector entities should be mindful that in the
event of a serious cyber attack on the United States
(e.g., disruptions to the electrical grid or to the
banking or communications systems), partisan disagreement in
Congress is likely to dissipate and give way to bipartisan
consensus, including a possible consensus on regulatory
requirements that today are politically infeasible.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
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